Hellenic Bank announced on Tuesday a profit of €240.7 million for the first 9 months of 2023.

According to a Hellenic Group press release, this profit was mainly driven by the higher interest income from placements with Central Banks, other banks and debt securities.

In addition, the bank retains a solid capital position with a CET1 ratio of 21.7% and a total capital ratio of 27.4%, significantly above minimum regulatory requirements.

Also, the bank announced a de-risked balance sheet with a NPE ratio of 2.7% excluding the NPEs covered by the APS agreement.

It is noted that transforming and addressing structural challenges are on track, focusing on digitalisation and efficiency improvements.

During the first nine months of the year, the bank proceeded with a new lending of €900 million, increased by 11% in an annual basis.

Commenting on the Group’s financial results for the nine-month period ended 30 September 2023, Antonis Rouvas, the Group’s Interim Chief Executive Officer, stated that the Hellenic Bank’s performance continued to be strong in the third quarter of 2023, with profit for the first 9 months of 2023 after tax totalling €240.7 million.

He said that the main performance drivers remain the higher interest income arising mainly from Central Bank placements and debt securities due to the higher ECB interest rates, as well as lower total expenses reflecting the 2022 VEES. The Bank’s performance for the first nine months of the year, he pointed out, demonstrates the strength of its business model.

“With about €900 million of new loans granted during the 9 months of 2023, up 11% year on year, we remain on track to achieve our annual lending target of €1.2 billion. The de-risking actions taken have reduced the NPE ratio to 2.7% (excluding the NPEs covered by the APS agreement). With a total capital ratio of 27.4%, significantly above the regulatory requirements, and with ample liquidity (Liquidity Coverage Ratio of 506%), the Bank’s Balance Sheet remains robust at challenging times of economic uncertainty and rising geopolitical risk,” Rouvas said.

He also went on to say that the significant strengthening of the Bank’s fundamentals has been recognised by major credit rating agencies. In October 2023, the Bank’s long term deposit rating has been upgraded to an investment grade of Baa3 after 12 years by Moody’s Investor Service. In November 2023 Fitch Ratings upgraded the Bank’s issuer default rating by 2 notches to BB+.

“Nevertheless, we remain watchful for any risks that could affect the Bank’s performance due to the challenging economic and operating environment, with rising interest rates, high inflation and heightened geopolitical risk,” he added.

Rouvas stated that he considers it imperative that the country has a stable and functional foreclosure framework for addressing strategic defaulters and for reducing moral hazard. Although, he added, the non-performing loans were mostly shifted outside the banking sector, the level of problem loans in Cyprus remains one of the highest in Europe limiting the sovereign credit ratings of the country.

“We reiterate our commitment to support our vulnerable customers and to work closely with the authorities for any proposed measures that will address the long-standing issue of NPEs, however the continuous discussion about changing the legal framework is destabilizing,” he said.

As far as labour issues are concerned, Rouvas stressed the Group’s constructive stance and irrevocable commitment towards finding solutions to all pending issues through dialogue and with the support of the Ministry of Labour and Social Insurance.

Other key highlights of the results are: A net interest income of €379.7 million, up by 84% in an annual basis, benefitting from rising interest rates and liquid balance sheet, mainly driven by placements with Central Banks

The cost to income ratio was 36% (adjusted for the Deposits Guarantee Scheme contribution and Special Levy) driven by higher NII and lower staff costs due to December 2022 Voluntary Early Exit Scheme.

The 99.6% of new lending exposures post 2018 are performing.

The NPEs provision coverage ratio (excluding NPEs covered by the APS agreement) was at 45% as at 30 September 2023.

The ample liquidity, with an LCR was at 506% and with €6.0 billion placed at the ECB (excluding TLTRO of €2.3 billion) and the MREL to TREA ratio was at 29.8%, well on track to fully comply with the December 2025 final binding MREL requirement.